Produced by the Alcohol Policies Project of the Center for Science in the Public
Interest, Washington Report
provides online information and updates about federal and state
alcohol-policy issues, including alcohol advertising and marketing, labeling,
product development, taxation, and industry political and commercial
initiatives. Washington Report also provides action alerts to
inform advocates of opportunities to promote and influence pro-health alcohol
Federal Policy Update
Congress Seeks New FTC Report on Alcopops and Booze Advertising
TTB Proposes New Regulations for Alcopops,
Calls for Public Comment
TTB Sets Strict Standards for Alcohol Health Claims
TTB Continues Reorganization
Oppose Beer Tax Rollback Bills H.R. 52
and H.R. 1305
Policies Project Advocacy News
Industry Official Warns Producers about Alcohol Ads
Top Competitive Bass Fisherman Stands Up to Busch Beer
Web Tools for Tracking Booze-Lobby Campaign Contributions
Check Out the Booze Lobby
What the Industry Says about...Job Losses
Congress Seeks New FTC Report on Alcopops and
Thanks to Representatives Lucille Roybal-Allard
(D-CA) and Frank Wolf (R-VA), in the conference report to the FY 2003 Omnibus
Appropriations Bill (H.J. Res 2 [http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_reports&docid=f:hr010.108.pdf]
see page 776), Congress directs the Federal Trade Commission (FTC) to examine
how liquor-branded alcopop advertising affects underage consumers. The FTC
must report to Congress within six months of the Act's enactment in January.
In addition, Congress, noting the alcoholic-beverage industry's failure to
implement the recommendations in the FTC's 1999 Report, "Self Regulation and the
Alcohol Industry," instructs the agency to "encourage the industry to adopt
stricter advertising placement standards" and "establish an independent
third-party review mechanism to limit the appeal and exposure of alcohol
advertising to underage consumers."
TTB Proposes New Regulations for Alcopops, Calls
for Public Comment
Due to growing concerns from states, the
Department of the Treasury and its Alcohol and Tobacco Tax and Trade
Bureau (TTB) issued proposed rules on flavored malt beverages (alcopops)
on March 24 [http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-6855.pdf].
TTB wants to "ensure the proper classification under the Federal Alcohol
Administration Act so that [product] labeling and advertising conform to
the applicable requirements...and to ensure consumers are adequately
informed, and not misled, as to the identity of these products."
TTB studied the contents of 114 malternatives and found that "it is very
clear that most of these products' alcohol is derived from distilled
spirits contained in added alcohol flavorings." At the same time,
they also found that most malternatives contain "very little beer."
Under the proposed rules, flavored malt beverages at less than 0.5%
alcohol-by-volume derived from distilled spirits flavoring would be
taxed as malt beverages; if they contain more alcohol from distilled
spirits sources, they will be taxed at the higher distilled spirits
Acknowledging that consumers may believe
that malternatives contain as much alcohol-by-volume as the distilled
spirit brand name on the product label, TTB also seeks to require that
producers list the alcohol content on the brand label. Current
regulations do not require such labeling.
The Alcoholic Beverage Commission in Tennessee has already tried to
classify liquor-branded malternatives as distilled spirits. Diageo
and Miller Brewing Co. challenged the decision and the issue went to
hearing before the Tennessee Alcoholic Beverage Control Board on
February 20. A decision is pending.
CSPI plans to comment on this issue and we will provide guidance for
activists in the field at a later date. We will also post our
comments when we submit them.
You may submit written comments by June 23, 2003 to:
Chief, Regulations and Procedures Division
Alcohol and Tobacco Tax and Trade Bureau
P.O. Box 50221
Washington, DC 20091-0221
Attn: Notice No. 4
TTB Sets Strict Standards for Alcohol Health
On March 3, 2003, the Alcohol and Tobacco Tax and
Trade Bureau (TTB), formerly the Bureau of Alcohol, Tobacco and Firearms (ATF),
announced final regulations regarding health claims on alcoholic-beverage labels
and in advertising. The new rules will take effect on June 2, 2003. [www.ttb.gov/regulations/ttb_td01.pdf]
Drawing on testimony from two public hearings in early 2000, TTB's new
regulations "prohibit the appearance on labels or in advertisements of any
health-related statement, including a specific health claim that is untrue or
tends to create a misleading impression." The rules specify that health
be truthful, properly detailed, and
adequately confirmed by substantial scientific evidence;
indicate the people for whom the health claim applies;
be balanced by information about the risks of moderate and heavier drinking,
including defining "moderate consumption" for specific groups of people; and
be qualified by a list of the categories of individuals for whom any levels of
alcohol consumption may cause health risks.
In addition, TTB will consult with the federal Food
and Drug Administration (FDA) if producers' health claims are found to be drug
claims. Directional statements, such as those that encourage consumers to ask
their doctors about the health benefits of alcoholic beverages, must include a
brief disclaimer advising that the statement should not encourage beginning or
increasing alcohol consumption for health reasons. Without this disclaimer, such
statements will be considered misleading.
TTB defines "health-related claims," as "statements and claims that imply that a
physical or psychological sensation results from consuming" any alcoholic
beverage "as well as statements and claims of nutritional value," such as
vitamin content. "Specific health claims," on the other hand, comprise
statements or claims that connect alcoholic-beverage consumption with diseases
or health-related conditions. This category includes implied specific health
claims (vignettes, symbols, or anything else that insinuates a connection
between alcoholic beverages and diseases or health-related conditions).
By identifying "health-related claims" and "specific health claims," and by
imposing detailed provisions for labels and advertisements that make these
claims, TTB has all but shut the door to misleading assertions about the
potential health benefits of consuming alcoholic beverages. We don't expect that
many companies will rush to make label or advertising health claims on alcoholic
beverages under the new conditions. If they do, the claims will be adequately
TTB Continues Reorganization
The Alcohol and Tobacco Tax and Trade Bureau (TTB)
held a meeting of stakeholders in Washington, DC in February to provide an
update on its transition from the Bureau of Alcohol Tobacco and Firearms (ATF)
under the Homeland Security Act of 2002. [TTB website: www.ttb.gov]
On January 24th, TTB began its work enforcing laws and provisions concerning the
production and taxation of alcohol and tobacco products. According to the
agency, industries will see few changes in agency responsibilities: collecting
excise taxes; classifying alcohol and tobacco products; managing permits for
distilleries, wineries, breweries and tobacco producers; and regulating
production, packaging, bottling, labeling, and storage of alcohol and tobacco
products. TTB will also continue to implement the Alcohol Beverage
Labeling Act and monitor misleading labeling and advertising of alcoholic
We do not anticipate that the TTB reorganization will create major changes in
the implementation of policies concerning the taxation, labeling, and
advertising of alcoholic beverages. CSPI will continue to monitor the
agency and provide information as necessary.
Oppose Beer Tax Rollback Bills H.R. 52 and H.R.
Brewers and beer wholesalers garnered considerable
Congressional support for legislation to slash federal excise taxes on their
products in the last Congress. A beer-industry-sponsored bill (H.R. 1305)
to cut the federal beer tax in half attracted 224 sponsors in the House, and
Senator Santorum (R-PA) introduced similar legislation in the Senate.
Just days after the opening of the 108th Congress, Representative Christopher
Cox (R-CA-47th) introduced H.R. 52 [http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.52:]
-- legislation that would reduce the federal excise tax on beer to its 1951
level. Another bill presents a bigger threat. Representative Phil
English (R-PA) re-introduced H.R. 1305 on March 18, with 122 original
co-sponsors. Brewers and beer wholesalers are now hard at work building
support for a beer-tax rollback, lobbying Congress and making generous campaign
contributions. Beer-industry lobbyists claim that the last tax increase on
beer destroyed 31,000 jobs, reduced income tax revenues, and burdened states
with unemployment costs. Recently, industry sources have tied beer-tax
cuts to the administration's economic stimulus package, suggesting that lower
beer taxes will help stimulate the economy.
The liquor lobby had its own tax-cut bill last session (H.R. 2023) and we expect
it to be re-introduced soon.
See which members of Congress have supported H.R. 52 [www.cspinet.org/booze/WRCongress.htm]
If your member is on this small, but growing list, please take a few moments to
write him/her and express your opposition to any reductions in federal excise
taxes on alcoholic beverages. If your member's name is not on this list,
he/she still needs to hear your opinion on this issue. Please pass on this
CSPI's UPDATED Action Alert: www.cspinet.org/booze/HR52AA.htm
CSPI Tax Resources: www.cspinet.org/booze/taxguide/TaxIndex.htm
Take a few moments to write to your Representative and urge
him/her to oppose any reductions in federal excise taxes on
alcoholic beverages. If you have already done so, thank you!
Please encourage friends, family, and colleagues to take action
Alcohol Policies Project Advocacy News
CSPI Asks CBS to Avoid Beer Ads on NCAA Cable
Because of the demand for war news coverage, the
National Collegiate Athletic Association (NCAA) men's basketball tournament may
air on alternate cable channels, including channels devoted to children's
programming. News reports have suggested that CBS will shift some games to
ESPN, Nickelodeon, and TV Land. With this shift, many more young children
could be exposed to beer ads that have long been a part of NCAA tournament
On March 12, CSPI wrote Sean McManus, president of CBS Sports, urging him to
reject beer ads during games aired on youth-oriented cable networks. CSPI
sent copies of the letter to the NCAA's president, Myles Brand of the University
of Indiana, and to J. Howard Beales, III, director of the Bureau of Consumer
Protection at the Federal Trade Commission (FTC).
Recent studies document that underage youth see more commercials for beer than
for other consumer products like juice and gum, and that those advertisements
can influence their knowledge of beer brands and preference, not to mention
their attitudes towards drinking alcohol.
State Tax Update
Governor Mike Leavitt of Utah signed two bills, S.B.
66 [www.le.state.ut.us/~2003/bills/sbillenr/sb0066.htm] and S.B. 153 [www.le.state.ut.us/~2003/bills/sbillamd/sb0153.pdf],
on March 24, increasing the state's taxes on beer -- from $11.00 to $12.80 per
31-gallon barrel ($0.35 per gallon to $0.41 per gallon) -- and hiking the
state's markup on liquor by three and one-half percent (Utah is a control
state). The increase in the markup is the first since 1983 and is part of
a major revision of the state's alcohol laws. Both laws go into effect
July 1, 2003.
Efforts to raise alcohol excise taxes are still
very much on the front burner in many states. Several legislatures now
have proposals before them, and legislation has made progress. In some
states, notable initiatives have met with defeat. For a summary of the
status of state alcohol excise tax measures across the country, visit this
State Alcohol Tax Cuts?
At the time of writing, 19 states have proposals to
increase taxes or implement fees on alcohol. However, New York and
Pennsylvania may have alcohol tax cuts in store.
New York law calls for the reduction of the tax on beer. The present rate
in New York, $0.125 per gallon, less than half the average of state rates, will
be reduced to $0.11 per gallon this year. The state budget deficit totals
more than $10 billion.
Pennsylvania, facing a budget deficit of $1 billion, has two pieces of
legislation that would cut the fees charged by the state Liquor Control Board.
Representative Robert Godshall (R) introduced legislation (H.B. 170) [www2.legis.state.pa.us/WU01/LI/BI/BT/2003/0/HB0170P0190.pdf]
that removes the state's markup on liquor and wine sales to hotels, restaurants,
clubs. Representative Larry Sather (R) introduced a bill (H.B. 154) [www2.legis.state.pa.us/WU01/LI/BI/BT/2003/0/HB0154P0178.pdf]
that cuts the state markup by one-third. Pennsylvania, as a control state,
sells wine and liquor and adds a markup to the wholesale price.
Global Trade Agreement Threatens State Alcohol
In closed negotiations on the General Agreement on
Trade in Services (GATS) taking place within the World Trade Organization, the
European Union has asked the United States to dissolve alcohol distribution
monopolies in 18 states to give European wine sellers access to tariff-free
trade. Sweden and Finland, two countries that regulate alcohol sales, have been
asked to do the same. U.S. agreement would essentially supercede federal, state,
and local regulations on the sale of alcohol; would deny alcohol control states
the right to create policy that is based on public safety or health goals; and
would eliminate state revenue, which according to the National Alcohol Control
States Association, totaled $41.7 million in sales in 1999.
Other GATS market access rules may eliminate limits on the number of service
providers, total number of service operations, or total quantity of a service,
likely affecting all states. The Bush administration has until the end of this
month to say which changes it may adopt.
Participants at the Alcohol Policy 13 conference discussed GATS issues and
adopted a resolution that will be sent to the U.S. Trade Representative. The
resolution asks that alcohol services be excluded from the agreement. [www2.edc.org/alcoholpolicy13/resolution.htm]
Industry Official Warns Producers about Alcohol Ads
Marcus Grant, president of the industry-backed International Center for
Alcohol Policies (ICAP), called for alcoholic-beverage marketers to ease
off of advertising alcoholic-beverage products with sexual or binge
drinking images, and instead focus on promoting moderate, responsible
drinking practices. His suggestion, delivered at an industry
conference sponsored by Impact Magazine, aims to avoid public
opposition to and government regulation of irresponsible advertising
practices that have become more common recently among brewers and some
distillers. Grant said, "we're not interested in pushing limits,
we're interested in promoting responsible drinking."
Jeff Becker, president of the Beer Institute, defended his industry's
advertising, saying, "[w]e know that we have critics, but our consumers
love our ads and that for us is very, very important."
Top Competitive BASS Fisherman Stands Up to Busch Beer
Jimmy Houston, dubbed America's most famous
fisherman, maintained his principles and lost an opportunity to compete in this
year's Bass Masters Classic fishing tournament. He can't participate
because he lost points for refusing to wear Busch Beer product insignia and
display the beer's logo on his boat. Citing his Christian background, he
expressed surprise and disappointment that more fisherman, particularly
Christian anglers, have not done the same.
Busch signed on as an official tournament sponsor last year. Under its
sponsorship agreement, players must wear Busch apparel and display the logo or
forfeit points to qualify for the BASS tournament. Although the rules
require players to highlight the Busch logos prominently, they also prohibit
alcohol consumption on days before and during BASS events.
Houston says that BASS competitors face similar pressure to those felt by NASCAR
racers when it comes to alcohol sponsorships. For instance, Hank Parker,
Jr. refused to endorse Seagram's Ice and has been barred from competing in
Despite declining sales in the alcopop category,
Diageo introduced Smirnoff Ice Triple Black in mid-January 2003, airing its
first ads during the Super Bowl. This drink targets young male consumers with
its rugged image and less sweet taste. Diageo hopes that product sales will
strengthen plans to create other extensions of Smirnoff Ice in the future and
fully secure its place as the number one distributor of alcopops.
With Bacardi USA, Anheuser-Busch launched its newest alcopop, Bacardi Silver O3,
in early March 2003. At 5 percent alcohol-by-volume, this drink targets the same
crowd as the multitude of other alcopops enjoyed by young, inexperienced,
introductory drinkers who enjoy sweet drinks. Although the market seems
saturated with products, and sales volume has slowed to the point of forcing
some products off the market, A-B anticipates that the new drink will succeed
because of its unique orange flavor. According to industry reports, newer
liquor-branded alcopops have been more successful lately than the original,
Jim Beam Brands Co. will release a new ready-to-drink beverage, Beam and Cola,
made with Jim Beam bourbon, in May 2003. The drink contains 5 percent
alcohol-by-volume, like beer and many malternatives, but actually contains hard
liquor. The advertising campaign for this product will begin in April, targeting
newspapers, outdoor and spot radio.
Web Tools for
Tracking Booze-Lobby Campaign Contributions
Two sites on the internet track political
contributions and provide useful information for activists who keep tabs on the
booze lobby and legislators.
The Center for Responsible Politics tracks political contributions to federal
candidates. This site offers a database of federal candidates and all of
their contributors, sorted by industry and individual giving. The web
address for this site: www.opensecrets.org.
A site maintained by the National Institute on Money in State Politics monitors
political contributions to state-level candidates. This site also allows
sophisticated searches by candidate and contributor category. The web
address is: www.followthemoney.org.
Check Out the Booze Lobby
The National Beer Wholesalers Association and the Beer Institute have set up a
website, www.beerservesamerica.org, that highlights the beer industry's
economic and social contributions to communities around America. It
features analyses of the jobs it creates, taxes it pays, and philanthropy it
distributes. The site provides beer lobbyists and their grassroots
activists with factual ammunition to oppose efforts to increase state beer taxes
and roll back the federal excise tax on beer. It's worth a look at the
exaggerated claims and self-serving arguments.
Anheuser-Busch has created several of its own sites to push the federal beer-tax
rollback (see article in this issue) in Congress. The website,
www.rollbackthebeertax.org, includes the claim that the tax on beer accounts
for 44 percent of its cost (considering every conceivable tax paid, in addition
to excise taxes). The site also highlights the apparent regressiveness of
taxes on beer, and calls the federal beer tax the "ultimate luxury tax."
We wonder whether the company considered the effects of its own price increases
-- several in the past few years -- on poor people and those of moderate
What the Industry Says About...Job Losses
In states proposing higher alcohol
taxes or fees, alcoholic-beverage lobbyists often argue
that even the smallest increase will result in job losses. Apparently
no increase is too small. In response to Oklahoma's effort to raise the beer license fee from $10 to $100
per year, convenience-store lobbyist Clayton Thomas
warned, "It will result in the loss of jobs." We didn't know
that retail wages in Oklahoma were that low!
For more information, please contact us at firstname.lastname@example.org.
Center for Science in the Public Interest
Alcohol Policies Project
1220 L St. NW, Suite 300
Washington, DC 20009
Phone: (202) 332-9110
Fax: (202) 265-4954
Washington Report has been produced with the generous support of the
Robert Wood Johnson Foundation.